What Does Lost Ticket Revenue From Harvey Mean for Houston Theaters?

While the Houston theater community has been slowly picking up the pieces a month after Hurricane Harvey, many questions have surfaced about what the actual financial impact of the storm on theater companies and other arts organizations will be. In many ways, it is still too early to fully understand how small and midsize theater companies will bounce back from the storm.

As the 2017-2018 season just gets underway, many questions have surfaced. What happens when a natural disaster forces companies to cancel shows? What does the lost ticket revenue mean for Houston’s theater companies?

After I wrote about the immediate aftermath of Harvey for American Theatre Magazine, I received a message from an arts leader in the Northeast who noted that my article did not mention that most large arts organizations have business-interruption insurance to cover lost ticket revenue when a natural disaster, such as flooding, forces them to cancel shows. The person noted how “good reportage” would have discussed business-interruption insurance.

Surprised by this message, I began to ask around the Houston theater community about such insurance policies. If companies have business-interruption insurance, then why would they be so openly discussing the detrimental impact of canceled performances and lost revenue streams?

Furthermore, this comment overlooks the many small arts organizations who frankly can’t afford luxuries such as business-interruption insurance.

I started at the top, with the Alley Theatre. While the Alley has $5 million in business-interruption insurance coverage, damage from Harvey was categorized as a flood. Therefore, the Alley only has $500,000 that can go against its $3 million of building flood coverage. Since the building flooded during Tropical Storm Allison in 2001, the company had trouble acquiring flood insurance and, when it finally did, its flood insurance policy would only cover up to $3 million of flood damage on the building and $4 million of flood damage on artistic contents, far less than the $15 million worth of damage the company now faces.

Furthermore, the Alley was forced to cancel the entire run of its annual hit, money-making holiday show, The Santaland Diaries. The world-premiere production of Rajiv Joseph’s Describe the Night relocated to the Quintero Theatre at the University of Houston, but that theater’s 185-seat capacity is far less than the Neuhaus’s 310. Even if the show were to sell out, the Alley won’t be able to make up the budget.

Luxuries such as business-interruption insurance are not standard across the Houston arts community.

In total, the loss of income from tickets to cancelled performances of The 39 Steps, the season subscription campaign, single tickets to Describe the Night, and not producing The Santaland Diaries is a “major six-figure number,” according to Alley Managing Director Dean Gladden.

Luxuries such as business-interruption insurance and even flood insurance are not standard across the Houston arts community. Comprehensive insurance packages are just not common for organizations that are still emerging and operating on a small scale. Nor do these companies have a steady stream of wealthy donors, grant funding and corporate sponsorships to negate the potential financial repercussions of Harvey.

Even companies with multi-million dollar budgets such as Stages Repertory Theatre do not have event insurance because, to put it simply, it’s too expensive. Harvey forced Stages to cancel 20 total performances of Woody Sez and Always… Patsy Cline, totaling a loss of roughly $50,000 of ticket revenue. Even for an organization with an operating budget of $4.1 million, this is still a significant loss.

In order to balance the budget for a fifth consecutive year, Stages is working to find opportunities to increase revenue and decrease expenses during their 2017-2018 40th Anniversary Season. Managing Director Mark Folkes remains optimistic: “We live in a remarkably generous city and I'm hopeful that our supporters will be thoughtful about contributing to the recovery of the full ecosystem of arts organizations impacted by this event,” he says.

While Stages has a robust 40-year history, owns its own space, and has a nuanced revenue stream, many Houston theater companies do not have these luxuries. For companies such as Rec Room Arts, the Houston Fringe Festival, Dirt Dogs Theatre, Shunya Theatre, Firecracker Productions, and Gravity Players, the loss of revenue due to cancelled performances is a major setback that has left many of these companies holding on by a thread.

In “Harvey Cancellations Continue to Hurt Houston’s Small Theater Companies,” Jessica Goldman details the immediate impact of the storm on Rec Room Arts and the Houston Fringe Festival. This year marked the 10th anniversary of Houston Fringe. Twenty productions were set to perform in the weeklong festival at MATCH, but the storm saw their numbers dwindle to only seven productions playing at MATCH from Thursday to Sunday.

A perennial moneymaker for the Alley Theatre, The Santaland Diaries (starring Todd Waite, above) has been cancelled in the aftermath of Hurricane Harvey.

Photo by Jann Whaley/Courtesy of Alley Theatre

Speaking of Rec Room Arts, Goldman writes, “But it isn’t the water damage that’s hitting the company hardest; it’s the cancellations due to the flooding that’s threatening their financial viability.” Rec Room Arts Board president Abby Koenig (a former Houston Press contributor) tells Goldman that 11 events and performances were cancelled immediately following the storm, totaling a loss of $5,000. The reasons behind the cancellations range from bad timing in a post-Harvey Houston to one late-night comedy show that had to cancel because of the city’s curfew the week following the storm.

“It has left the young company wondering how it will afford to continue programming,” notes Goldman. Like nearly every local company, from the smallest to the largest, Rec Room Arts is trying to find the balance between supporting Harvey fundraising and supporting the financial needs of the organization. Needless to say, this fiscal tightrope isn’t an ideal place from which to engage in art-making.

While lost ticket revenues have a more tangible impact on young companies, cancelled performances oftentimes slow down a production’s momentum. When that momentum comes to a halt, drawing an audience becomes increasingly difficult; that was the case with Dirt Dogs Theatre Co. and Gravity Players.

Dirt Dogs was forced to cancel opening-weekend performances of Yasmina Reza’s Life X 3. While the company continued their run the weekend following Harvey, the audiences were significantly smaller than they normally see, with numbers as low as the high teens and low twenties. Dirt Dogs only had to cancel three performances, but because the storm fell on opening weekend, the production was never able to gain the momentum typically seen at the theater company. Based on original budget projections, the company fell roughly $6,000 short of their expected ticket sales.

Dirt Dogs’ approach to making up for these losses is twofold: “Moving forward this season, we will look at areas where we can reduce expenses for our remaining productions to mitigate the loss,” says executive director Trevor B. Cone. “We are also in the midst of a fundraising campaign and will allocate a portion of what's raised to offset these losses.” While cancelled performances and lost momentum can be detrimental to small-budget theater companies, Dirt Dogs remains optimistic that the company can remain afloat and continue to cement itself in the local theater ecosystem.

New company Gravity Players was on track to cover production costs for its hit run of The Last Days of Judas Iscariot, pay the artists a livable wage and have money in the bank to put toward its next production when Harvey hit. While the company cancelled only three performances because of Harvey, when it finally returned to the stage, audiences were sparse. Before the storm, Gravity Players averaged about 100 attendees per night. After the storm, it managed to draw an average of only 40 people per show.

Many uncertainties about ticket sales linger in the local arts community.

While 40 patrons seems low, compared to other companies that performed the weekend following Harvey, these numbers are impressive. Even though Gravity Players added two more performances, momentum was all but lost. “If the storm hadn't happened, who knows how well or far-reaching we would have become,” admits founder Courtney Lomelo. “Harvey couldn't be negotiated so we had to make the best of a bad situation and that's with less than the potential attendance expected and a financial blow to the company.”

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While the effects of cancelled performances and lost ticket revenue have already made their mark on the financial realities of many Houston theater companies, many uncertainties about ticket sales linger in the local arts community. As Houstonians continue to rebuild and donate to Hurricane Harvey relief efforts, local theaters will continue to monitor if the storm has any impact on consumer behaviors in the coming months.

While some patrons will continue to attend the theater with regularity, others will not, seeing this as an optional luxury. With the Alley Theatre’s annual production of The Santaland Diaries cancelled and the Houston Ballet scrambling to find a venue for The Nutracker, other ticket buyers might migrate to different companies. Can’t go to The Santaland Diaries? Try A Midnight Clear or Panto Cinderella at Stages, Sleeping Beauty and Her Winter Knight at TUTS, or The Best Christmas Pageant Ever at A.D. Players.

Regardless, theater companies large and small, old and new, remain optimistic that they can continue to thrive and cement themselves as an integral part of the local community. “We stand with our peers in the arts to invite Houstonians to continue to engage and support the artists and organizations that enrich our lives year-round. This is a difficult time for so many in our community,” notes Mark Folkes. “The positive psychological and emotional impact of the work of our arts community is even more relevant at a time when we together face catastrophic loss on the scale we've experienced from Hurricane Harvey.”

One thing is certain: As the region continues the rebuilding process, we cannot forget about the things that make Houston so special. The arts are a vital part of this community. Houston theater companies large and small, old and new, need the support of the community at this time.